FRANKFURT (Reuters) - Germany’s Merck KGaA (MRCG.DE) said it was targeting the lower end of its forecast ranges for 2017 results after a stronger euro inflated costs, though double-digit growth at its consumer health unit boded well for the possible divestment of the business.
Merck said on Thursday it was now eyeing the lower end of target ranges for 2017 revenues of 15.3 to 15.7 billion euros (13.52 billion pounds to 13.87 billion pounds) and for adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of 4.4 to 4.6 billion euros.
Its business making liquid crystals for flat screens, a major profit contributor, incurs most of its production costs in Germany, while selling mainly to electronics groups in Asia.
The consumer health business with vitamin brands such as Neurobion and Femibion, which Merck has said it might sell, saw quarterly revenues rise 11 percent to 236 million euros on growth in Asia and Latin America.
Analysts have put its potential value at roughly $4.5 billion.
The Merck consumer health unit, which according to Berenberg analysts chalked up a “standout quarter”, outperformed much larger non-prescription drugs businesses owned by Bayer (BAYGn.DE) and Pfizer (PFE.DE), thanks to its focus on emerging markets.
The rivals were held back by stagnant or shrinking sales in U.S. markets, where consumers have been shifting to online mail order and cheaper brands.
Merck’s third-quarter adjusted EBITDA slipped 8.3 percent to 1.1 billion euros, broadly in line with market expectations, as it spent about 100 million more on drug development than a year earlier, mainly to widen the use of cancer immunotherapy Bavencio.
The shares rose 1.2 percent to 93.48 euros in early trading, beating the STOXX Europe STOXX Europe 600 Health Care .SXDP index’s 0.3 percent gain.
Reporting by Ludwig Burger; Editing by Maria Sheahan and Victoria Bryan